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AGRICULTURAL CREDIT CO-OPERATIVES AS VAIBLE
SUPPLEMENTS FOR FINANCING SMALL SCALE
FARMING IN NIGERIA
(A CASE STUDY OF SELECTED AFRICULTURAL CREDIT
CO-OPERATIVES IN UMUDIKE, IKWUANO L.G.A)
ABSTRACT
Financing is an important area in any business today.
In agriculture, it is also important in most of its business has
been financed in one way or the other through retains,
banks, governments, financial institution and so on. The
small-scale farmers are mostly handicapped in the art of
obtaining finance for the production. At times, they are
really putting in their effort but end receiving lesser result
because of lack of finance. From the findings, these small-
scale farmers need a finance institution credit organization
that can be able to operate at their level. It can be said that
agricultural credit co-operatives is viable supplement to
finance small-scale farmers due to the nature of their
operations.
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TABLE OF CONTENTS
Title page--------------------------------------------- i
Certification------------------------------------------ ii
Dedication-------------------------------------------- iii
Acknowledgement----------------------------------- iv
Abstract---------------------------------------------- vi
Table of contents------------------------------------ vii
CHAPTER ONE
1.0 Introduction----------------------------------- 1
1.1 Background of the study--------------------- 1
1.2 Statement of the problem-------------------- 2
1.3 Objectives of the study---------------------- 3
1.4 Scope of the study-------------------------- 4
1.5 Research Questions-------------------------- 4
1.6 Significance of the study--------------------- 6
1.7 Limitations of the study---------------------- 6
1.8 Definition of terms--------------------------- 7
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CHAPTER TWO
2.0 Literature Review----------------------------------- 9
2.1 The nature of Agricultural credit co-operatives---- 10
2.2 Agricultural Credit---------------------------------- 11
2.3 The nature of small – scale farming-------------- 14
2.4 Role of credit in Agricultural development------- 17
2.5 Problems of small-scale farmers in
Agricultural finance------------------------------- 23
2.6 Role of co-operative in financing Agricultural
Farming in Nigeria------------------------------- 27
Reference---------------------------------------- 32
CHAPTER THREE
3.0 Research methodology-------------------------- 33
3.1 Research Design--------------------------------- 34
3.2 Sampling Design-------------------------------- 35
3.3 Method of data Collection--------------------- 35
3.4 Method of data Analysis------------------------ 36
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CHAPTER FOUR
4.0 Presentation and Analysis of data--------------- 38
4.1 Presentation of data----------------------------- 38
4.2 Analysis of Data--------------------------------- 41
4.3 Decision or Interpretation---------------------- 44
CHAPTER FIVE
5.0 Summary, Conclusion, Recommendations------- 48
5.1 Summary------------------------------------------ 48
5.2 Conclusion----------------------------------------- 51
5.3 Recommendation--------------------------------- 53
Bibliography------------------------------------- 67
Appendix----------------------------------------- 60
Questionnaire----------------------------------- 62
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CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Agriculture is an art and a way of life, it yet remains a
business and like any other business cannot be carried on
much less expanded without adequate funding. In Nigeria
Agriculture, it had a prime place in the past economy but oil
industries. Infact agriculture was until the 70’s the principal
foreign exchange earner in the country. For instance in 1962
it accounted for 82% of the total export value of the country
but by 1983, it has fallen to two time of 3.62% and as at
1985 total non-oil export accounted for only 5.2% of the
country total export, so one can imagine what share would
be. This poor performance of the agriculture sector can be
attributed to general neglect and funding of the sector.
Therefore, there has been a great concern on the
inability of the agriculture sector in Nigeria to adequately
fulfill its expected roles which include ensuring food security
for a rising population, providing raw materials for the
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industrial sector, generating employment and at the micro-
macro levels, earning foreign exchange and contributing to a
healthy balance of trade. Subsistence oriented small holders
dominate Nigeria agriculture. This account for the low level
of investment.
The basic agricultural finance problem is poverty
among peasant smallholder. Agricultural credit is extended
to farmers to cover expansion before crops and livestock are
ready for sale and to cover crop storage. So agricultural
credit co-operative will be available supplement for financing
small-scale farming in Nigeria.
1.2 STATEMENT OF THE PROBLEM
Financing is the art of rising and using of funds by
individuals co-operatives and governmental organizations for
the day to day operations, running and management of a
business undertaking.
The above definition, financing of agriculture generally
has been and is still a serious problem in Nigeria, financing
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of large and medium scale farming have been improved but
financing of small scale farming so far have defiled all effort,
with the reform that various attempt made by state and
federal government have yielded little or no result.
This research project looked at agricultural credit co-
operatives as viable means of financing small scale farming
since all the conventional means seems to have failed. The
research involves studying these agricultural credit co-
operatives of financing small scale Agriculture in Nigeria.
1.3 OBJECTIVES OF THE STUDY
This research project is intended to accomplish the
main objectives which are to determine how agriculture
credit co-operatives can act as viable supplements for
financing small scale farming. Other objectives include:-
a) Determine the sources of finance available to
agricultural credit co-operatives.
b) Determine the level of access of farmers to credit
from their agricultural credit co-operatives
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c) Determine the potential of agriculture credit co-
operatives to help in finance, management and
members.
1.4 SCOPE OF THE STUDY
The researcher found the impossibility of covering
many small-scale farming in Nigeria, so she focuses her
investigation in selected Agriculture credit co-operatives in
Umudike Ikwuano L.G.A in Imo state. The research which is
based on finding a solution to the problem of financing a
small-scale farming in Nigeria by agricultural credit co-
operatives.
1.5 RESAERCH QUESTIONS
In carrying out this research work, the researcher
asked the following questions in the agricultural credit co-
operatives in Umudike Ikwuano L.G.A.
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1. Could there be any solution for financing based on the
agricultural credit co-operatives scheme?
2. Will financing by the agricultural credit co-operatives
provide small scale farmers with growth, expansion and
development?
3. Is contribution of co-operative organization in financing
agriculture in Nigeria especially small scale farming
feasible?
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1.6 SIGNIFICANCE OF THE STUDY
The importance of agriculture to the economy and need
of Nigeria can never be over emphasized. It is agriculture
that provides the need of the country and it is the small
scale farmer that do realization of this goal of supplying food
from the agricultural sector. The benefit you are to derive
form this study will be if small-scale are finance, there will
be enough food at affordable prices to the people. It is then
quite significant to study why all the available means of
financing the small scale farmer have not worked and to
look for a new way of financing it so that it would contribute
its quote effectively to the economic development of the
nation.
1.7 LIMITATIONS OF THE STUDY
This research has not been easy at all. There are lots of
factors inherent in the research situation that affects the
results.
These factors include:-
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Time Constraint: This is because the research project has
to be completed within three months and so the researcher
has to combine the lecture and the research work which has
to make it longer as never expected.
Shortage of finance: This is another big obstacle, which
has to involve the money used in going to various places,
then the money for typing and binding it not excluded. But
all these not withstanding, all best applied to see that
research work was successful.
1.8 DEFINITION OF TERMS
APMEU: Agricultural Project monitoring and
evaluation unit.
ACDI: Agricultural Co-Operative Development
International.
ACGS: Agricultural Credit Guarantee Scheme
ACGSF: Agricultural Credit Guarantee Scheme Fund.
CCMS: Co-Operative Credit and Marketing Societies.
CPMS: Co-Operative Produce Marketing Societies.
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FACU: Federal Agricultural Co-Ordinating Unit.
FEAP: Family Economic Advancement Programme
FMCS: Farmers Multi-Purpose Co-Operative
Societies
GFS: Group Farming Societies
NACB: Nigeria Agricultural and Co-Operative Bank
NALDA: National Agricultural Land Development
Authority
NACRDB: National Agricultural Co-Operative And Rural
Development Bank
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CHAPTER TWO
2.0 LITERATURE REVIEW
Finance is the lifeblood of any business organization, be
it in agricultural, manufacturing, commerce or services
sector. In fact business or organizations cannot perform very
well without adequate funding. This unique role of finance
makes it to be very important. In all human endeavors it
needs adequate funding for its goal to be achieved.
In this literature, the author looked under these
subheadings:-
1. Importance of agriculture
2. Role of credit in agricultural development
3. Sources of credit to farmers
4. Roles of financial institutions in agricultural
finance in Nigeria.
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2.1 THE NATURE OF AGRICULTURAL CREDIT CO-
OPERATIVES
There has been a great concern on the inability of the
agricultural sector in Nigeria to adequately fulfill its expected
role which includes ensuring food security for a rising
population, providing raw materials for the industrial sector,
generating employment and income at the micro-macro
levels, earning foreign exchange and contributing to a
healthy balance of trade.
Nigerian government in the past enacted different but
related programms like the accelerated food production
programmed (1972). Operation Feed the Nation ( OFN)
1976 and the Green Revolution, (1979) there was also such
programmed, such as the Better Life programmed aimed at
using rural women to boast agriculture, and their family
support programme.
Almost all the programme incorporated the provision of
credit to agriculture. Others such as the rural banking
scheme, agricultural credit guarantee scheme fund (ACGSF).
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Concessionary interest rates as well as the establishment of
the Nigeria Agricultural co-operative and rural development
bank (NACRDB) were expected to boast rural and
agricultural credit supply.
The basic agriculture finance problem is poverty among
peasant small holders. Even if farmers have the inclination
to increase their level of production, poverty entrap them at
a low equilibrium level with factors and inputs beyond their
purchasing power, while they are compelled to sell in times
of surplus but low prices to meet urgent family needs or due
to the lack of storage, transport and processing facilities.
2.2 AGRICULTURAL CREDIT
Credit is obtaining resources with a promise to pay in
the future. It is granted in exchange for goods, services,
money or another department given in the present. Credit
therefore supplement money in the economy makes possible
the sale of goods and services with immediate payment by
the buyer. Time factor is another essential part of every
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credit transaction. Credit must be based on the borrowers
character, capital, collateral capacity and condition.
Agricultural credit is extended to farmers to cover
expenses before crops and livestock’s are ready for sale and
to cover crop storage.
TYPES OF AGRICULTURAL CREDIT
There are two types of agricultural credit distinguished
on the basic of source. It includes formal and informal
credit.
Formal Credit: Formal sources of credit are institutionalized
and within the control of government monetary authorities
and policies, Examples are banks and government agencies.
The liberalization of the financial market under the SAP since
1986 meant that most of the compulsion on banks to lend to
agricultural
(Or any other sector) was abolished (Nwajiuba 2000). The
agricultural credit guarantee scheme is still however exists.
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Liberalized financial market include deregulation of interest
rate by which market forces determine the cost of credit
central bank institute this scheme.
Informal Credit: These are non-institutional credit. The
sources of informal credit includes: money lenders, Esusu
and other credit clubs. The strength and resilience of
informal credit lies in the lack of bureaucracy, timelines,
flexibility, in credit conditions and a general personal inform
touch. Defaults rate is low due to the social sanction. Driving
form the bounds between lenders and borrowers. Real
interest rate may however be higher than formal credit.
Unconditional security may be accepted.
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2.3 THE NATURE OF SMALL –SCALE FARMING
Small-scale farming may be defined as an enterprise
employing between 5 and one hundred (100) farmers with
an annual turnover of about 400,000.00 small scale farming
employs many Nigerian particularly those dwelling in the
rural areas. This considered to be involved in small scale
farming business includes those who farm for commercial
purpose and not necessary, those engage in subsistence
farming. Farming in Nigeria technology is not advancing.
This is as a result of lack of adequate farm land, poor
preservation of harvested crops and fertilizers and seeds.
Though farming is lucrative, but the risk associated
with it in Nigeria is as a result of inadequate support from
government. The activity of government agencies created to
reform the sector has always left much to desire. For now, it
is one of the unattractive sectors to private sectors
investment.
Lack of capital: Most agricultural co-operative farmers
require a large amount of capital to establish and to operate
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the business. In agricultural production. Co-operative
require some things to boast their production and some of
the requirements includes access to tractor either by
purchasing or hiring, seeds/seedlings, fertilizers and other
chemicals. There is therefore no doubt that substantial
capital is require to organize such agricultural co-operative
management of the farm which range from cultivating,
planting, harvesting, storage and marketing.
Although various source of finance are available co-
operative society both internal and external, but these
sources are grossly inadequate. The financial institutions
have not given any assistance to agricultural co-operative or
small-scale farmers because they have little confidence in
the societies.
Lack of patronage: Patronage is very important.
Component to successful small scale farmers more especially
in agricultural co-operatives to the societies. Patronage is
not only in the financial aspect, agricultural co-operative
societies and small-scale farmers need enough time to be
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devoted to the farm right from the preparation stage to the
harvesting period.
Inadequate marketing outlet: Many agricultural farmers
who produce huge amount of product suffer from poor
marketing. Inadequate marketing outlets results from poor
infrastructural facilities, like roads, water, wages, substantial
agricultural output by these societies cause more problems
for the organization. These intend to discourage members in
subsequent season.
Attitudes of Banks towards Small-scale Farming: Banks
on their own part have argued that they are discourage to
lend to this small-scale farming draw up feasibility reports
that are viable and they do not maintain adequate financial
records about their business. The small scale can obtain loan
form the bank on their own merit except the state
government stands as guarantors. This bank attitude is
partially as a result of careless manner in which some
farmers handle bank loan. In the past where in most cases
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government are made to repay such loans which they are
guarantor.
2.4 ROLE OF CREDIT IN AGRICULTURAL DEVEOPMENT
Though agriculture is an art and a way of life, it yet
remain a business and like any other business cannot
operate unless funds are available for maintenance,
replacement of its capital equipment and other expenses.
Most authors on this issue are unisonous on the need
for adequate funds.
Authors believe that finance is the life blood of other
business so also it is for agriculture, it must be noted that
credit as one of the input of agriculture is very important
though other factors like labour, land and entrepreneur are
also important. It is credit that it is been used in buying
them so funding is a basic necessity of agricultural
development.
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According to Soyingbo, agricultural credit can be
powerful especially if supplied in sufficient quantity and used
efficiently.
TYPES AND FORMS OF CREDIT
1. Short-Term Credit: This is the one which finance
the current year’s crop operation, seeds, fertilizers
and farm expenses until the crops is sold. This may
not be large
2. Medium-Term Credit: This is the one that is longer
than one year but than three years. It is required for
the acquisition of breeding stock with a short life.
3. Long Term Credit: This is necessary to acquire
major machines, carryout major improvement of
farmland and buildings.
SOURCES OF CREDIT
There are two main sources of credit to farmers via
internal and external sources.
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Internal sources: consist mainly of net cash flow operation
in other words it is the profit generated by the farmers form
the farm which is saved for future investment. In most cases
this source of credit is very limited as farmers. In the
country had in the past hardly make enough profit to sustain
them very well not to talk of savings for future investment.
This source however have in the past been the major
source of credit to farmers but it is fast changing as farmers
move external credit to expand their production with their
aim of making much profit.
External source: This includes net flow of loan funds, net
sale of real estate and the modern times equity introduced
by new properties. These external sources of credit can be
divided into two major areas which include:
1. Non- institutional source
2. Institutional source
Non-Institutional source is the major source of external
credit in the past. It includes credit from relatives,
merchants, and friends and money lenders.
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Here before loans are out there must exist between the
lenders and the borrower. Some elements of familiarity,
confidence and trust. In some part of this source interest are
not normally changed. Non-institutional has various
limitations because of lack of trust between friends and
relatives.
Institutional Source can be divided into two which include
domestic and foreign sources. Domestic source includes the
earliest loan from traditional thrift and savings. Institutions
like Esusu or Isusu though some of them still exist while the
modern financial institutions includes commercial banks, co-
operative banks, agricultural credit guarantee scheme, the
Nigeria agricultural and co-operative banks, co-operative
financing institutions and other financing institution. Most of
these financial institutions are however not been granting
loans to farmers because the risk involve in agriculture and
cost of financing the loan scheme to cover all the scattered
small-scale farmers in the country.
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According to Wrights J.A principal agricultural manager.
IBWA LTD “Hour opinion, there is no excuse for commercial
bank risking depositors money or what is an excellent farm
producing first class can be put in the stores and represent
some sort of tangible assets. Generally speaking,
agricultural product is highly perishable and consequently
the approach to agricultural financing is quite different. Also
laying his quite support to the merchant and commercial in
their attitude towards agricultural financing.
According to Ibru M.O.C chairman and chief
executive of Ibru organization Lagos, Nigeria. Financing of
small scale farming is very expensive and many be
impossible to cover the ratio. Also one should sympathize
with the banks because of low grants of such loans to
farmers who are widely literate and lack understanding of
how to get loans. He continued government should rather
create a special financing assistance programmed that could
recognize and neutralize their peculiar problem
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Ashamu E. traced the problem of farmers getting loan
on assistance of collateral. He went on to say that even the
ACGS fund could not help unless the government should
increase the guarantee to 100%, otherwise he
recommended that thought banks are supported to be than
main suppliers of credit to farmers, this is limited and in
most cases, don’t even get to trust farmers. Foreign
institution source came mainly from world and its agencies
life F.AA ands IDA. The first agricultural loan to Nigeria from
World Bank in 1971 and the amount involve was $72million
for cola rehabilitation in the western Nigeria. As at 1983
total World Bank agricultural loan to Nigeria shows at
$763m, this is substantial and can be said to be one of the
major source of credit to farmers but how far can the credit
get to farmers is another matter.
According to Soyingboi of ICON Merchant ltd, It is the
relevant of regarded as non-chalance on the part of
merchant banks, but could be born out of absence of an
effective organization and or institutional structure for loan
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administration, agricultural project appraisal and bank of
sophistication on the part of small farmers to keep adequate
records and financial statement.
2.5 PROBLEMS OF SMALL-SCALE FARMERS IN
AGRICULTURAL FINANCE
In Nigeria most of these small-scale farmers live in the
rural areas and they produce up to 80% of total agricultural
output of the country. These small scale farmers who
predominate in Nigeria agriculture, according to Okoronuem
are characterized by the following illiteracy, ignorance, little
capital, small size farm, lack of tangible assets, low
productivity, low income, little or no savings and
constraining rural environment.
According to Okoronuem, this characteristic conspire to
make this services or formal source of finance inaccessible
to the small-scale farmers. The consequence is that the
small-scale farmers. The expose to informal source at
exorbitant cost. Illiteracy and ignorance make it impossible
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for the small-scale farmers to understand loan application
forms or how to complete them. They find it difficult to make
relevant inquiries without relying on third parties of doubtful
influences.
These farmers find it difficult to approach banks and
other financial institutions. Small-scale farmers in
approaching financial institution because their needs for
fixed and working capital are small and can be provided at
high cost by financial institutions. By implacable, merchants
and large-scale farmers generally have access to financial
institutions but those categories of farmers are the minority
in the Nigeria agricultural settings.
Other problem that affects all farmers relates to delay
in reaching and implementing decisions on loan application
by banks, inadequacy of loan. Such loans since they are not
granted at the specific time the funds are needed for
clearing, planting and harvesting as the case may be.
Lack of capital would mean that the small-scale
farmers’ productivity is corresponding lower productivity
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translates into low repayment capacity that will lead to high
default rate in loan administration. Low capital combined
with small-size of farm holding reduces potentials of profit
for further investment inspector. If sizes are elastic to
increase productivity through factors complimenting but
form size do not always respond to increased finance, since
traditional land tenure system reduces the size of farm
holdings.
Lack of clear title to land increases the risk of advances
to farmers, where title to land increase serves as collateral
security where land market operates and marketable value.
Since farmers lack tangible security title deed,
substitutes and increase advance to agricultural sector. Low
level of productivity and hence low income also militate
against farmers in raising agricultural finance. Low
productivity is a function of paucity of the co-operative
factor in production. These results are reduced. Output and
income, since the income need of farmers are generalized.
In consequences the small farm met a vicious cycle of
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poverty, low capital and the cycle is complete. The small –
scale farmer is weighed down by these constraints which will
tend to keep him permanently poor unless government
intervenes and introduces a big way to punish him with a big
push out of their constraining vicious cycle of poverty.
Furthermore, the rural environment does not have the
amenities that can help to induce productivity. Example
water, electricity ad good roads. So the constraining vicious
cycle tends to persist.
A high default in agriculture tends to inhabit further
advances in this sector. However to solve this problem
weighing against small-scale farmers getting finance.
Don Ike in his article titled ‘finance agricultural
development in Nigeria introduced the following suggestions.
Credit institution should be encouraged to give more
assistance to agriculture, adopting hire purchase in
purchasing some items where loans or other uses.
Encouraging banking habit among the rural farmers so that
the bank mop up excess liquidity and grant it to the needed
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farmers. Opening more rural bank branches so that farmers
should have access to these banks, education and public
enlightenment should be set to wipe out illiteracy and
ignorance amongst the farmers, so that they can at ;least
differentiate between agricultural loan and a granted project
that such project has been carefully selected and has
potential of repaying the loan.
In the course of implementing of the projects it should
be properly supervised and evaluated and also appraised
form time to time to ensure compliance. Also before
approval of the loan, care must be taken to ensure that is
efficient management to manager the loan efficiently.
2.6 ROLE OF CO-OPERATIVE IN FINANCING
AGRICULTURAL FARMING IN NIGERIA
Contribution of c-operative organization in financing
agriculture in Nigeria especially small-scale faming has been
very important and cannot be overlooked. As earlier stated
no business can survive without adequate flow of finance.
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The co-operative help in several ways in financing
agricultural farming in Nigeria. Co-operative organization
helps through their banks lending to agricultural farmers in
Nigeria. The co-operative banks gives loans to agricultural
farmers with little or no interest charged.
Co-operative financing of agricultural dates. Back to the
early dates of quasi-co-operative like the Esusu clubs, later
come to the modern co-operatives which started first in the
western.
Nigeria in the 1930’s it can then concentrated in
financing of cocoa farming, processing and marketing for its
members. The societies then succeeded inside trucking the
activities of the profit of their sweat. It was hitherto about
1935 that the government started to recognize the
importance of co-operative, this leading to the recognition of
co-operatives.
Among the earliest co-operative society to be
established in the country was the ogba coca co-operative
society. This co-operative society engages in marketing. The
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1950’s and 1960’s saw the establishment of state apexes of
this co-operative organization. It also brings the government
involvements in co-operative organizations. This leads to
formation of such co-operative societies like eastern Nigeria
cooperative palm produce exporters limited, association of
thrift and loan co-operative of eastern Nigeria limited,
association of farmers co-operative, association of farmers
co-operative societies of eastern Nigeria
The 1970’s witnessed the registration of many multi-
purpose farmers’ co-operative societies. As at present, at
least one of such farmer’s multi-purpose farmers co-
operative societies (FMCS) can be in every community in
former eastern Nigeria and they engage mainly in
agricultural financing which is the main occupation of
members. Infact these FMCS have been found to be
channeling funds to those small-scale farming to emphasize
the role of c-operative in financing agriculture in Nigeria.
Odugbanjo Kola, chief inspector of co-operative bank
limited Ibadan said “there is no gain saying the fact that the
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hope of the co-operative movement is seen as a means of
general economics development in agricultural productivity.
It can be increased through the co-operative societies. This
therefore is an opportune time to drive the point home to
us. That there is no organization today in Nigeria that has as
many facilities as co-operative movement to operate at the
village level for equitable distribution of government
amenities particularly as regards the achievement plans. He
continued experience has shown that agricultural ventures
undertaken by individual have continuously been
unprofitable and discouraged.
The answer to agricultural development is co-operative
by this, it does not mean co-operative among peasant
farmers only but a coming together of our seasonal
agriculturist as co-operative societies in Nigeria. Professional
and businessmen have realized the need that joint efforts
with a view to meet competition. The farmers are yet to
realize the importance of co-operative effort. There is also a
conspicuous absence of local representatives from the
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board. The envisaged institution for implementing
agricultural credit to small farmers would be in the form of
multipurpose co-operative societies as opposed to exciting
single purpose agricultural credit co-operatives.
From the foregoing, one can see that the contribution
of co-operative has been on the increase and mostly small-
scale farmers in the rural areas have felt its effect.
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REFERENCES
OKWONKWO, M (2005): Agricultural Co-operative
Extension. Publisher in Nigeria. By
dab2s Enterprises Hi kagha st Owerri
imo state.
WRIGHT J. A (1981): Problems of Agricultural Financing.
Bullion Delhi Vards publications Ltd
U.S.A.
IKE D. O (2003): Rural Banking Programme in Nigeria.
Lagos king and George printing press
Ltd.
Ike D. O (2001): Appraisal of agricultural credit guarantee
scheme fund in Nigeria; Nigerian journal
of financial management.
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CHAPTER THREE
3.0 RESEARCH METHODOLOGY
Research methodology as the name implies means the
way the work was carried out. It presents in sequential
order how the investigation was done or executed.
Broadly defined research as the process of finding out
or searching for the solution to a problem. According, a
problem in research is any question that needs to be solved.
In research methodology of this study, the central problem
is to find out how agricultural credit co-operatives will act as
viable supplements for financing small-scale farming in
Nigeria.
In view of this research have adopted some special
statement method aimed at arriving at a purposeful research
finding while elate to the unique nature of the subject
matter. It also used survey approach which is a type of
discipline research in which data are typically collected
through questionnaire, interview and observation. It is
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popularly used to asses the ideas or opinion towards
individual events, organization.
3.1 RESEARCH DESIGN
With the research problems stated and the hypothesis
formulated, the research had to design the method of data
collection which involves primary and secondary Data were
in form of oral interview and questionnaire administered to
the staff of the financial institutions like ACGSF, NACRDB
and commercial banks while the secondary data were
gathered from articles journals and books, published and
unpunished. The researcher also collected data from
seminars and symposiums in the state library, Enugu state
university of science and technology library, institution of
management and technology library, university of Nigeria
Enugu campus library were also visited to source relevant
facts.
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3.2 SAMLPING DESDIGN
Sampling design is the process of not undertaken
complete enumeration due to limitation in resources. The
option is to limit our study to some of the objects selected
from some states in Nigeria with a view to extending our
findings to entire population.
The aim of sampling is that of making influence about
the whole in sampling design of this study, that his research
Umudike Ikwuano L.G.A IN Abia state was taken for
sampling design in essence of small-scale farming while was
been used by agricultural credit co-operatives as viable
supplements for financing them. The reason is based on a
carefully guideline at cost that is affordable.
3.3 METHOD OF DATA COLLECTION
In selecting this research, the information was collected
from the research administered, questionnaires was
administered on the members of the agricultural credit co-
operatives Umudike Umuahia for the purpose of this
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research. Data were collected from two main sources, the
primary and secondary sources. The generated specifically
for the research work and which because necessary in order
to gain insight into the research topics and to prove as much
as possible the authentically of the study primary were
collected through questionnaire administered on the
members of agricultural credit co-operatives Umudike
Umuahia.
Secondary data on the other hand consists of
information that is related to the research which were
already in existence, they serve as a stepping stone because
the knowledge gathered by others on related topics quips a
researcher in his efforts to generate primary, data secondary
data were usually collected from textbooks, journals and
unpublished works.
3.4 METHOD OF DATA ANALYSIS
The researcher will administer questions to co-
operators both in government work and the officer of co-
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operative societies. From the questions administered,
information’s gathered will be analyzed through the usage of
percentage as required informal guide.
For example of 100 questions are to be administered,
the Reponses from the respondent will be apportion from the
percentage.
For example
25 – 83%
5 – 16.9%
Total percentage 100%
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CHAPTER FOUR
4.0 PRESENTATION AND ANALYSIS OF DATA
4.1 PRESENTATION OF DATA IN TABLE
From the farmer’s questionnaire carried out, the
number of respondents and the statistical data collection are
represented table below.
Question No 5: What area of farming do you operate on?
Table 1.1 Analysis of response to question No 5
OPTION RESPONDENT PERCENTAGE
Crop 15 60
Cattle rearing 10 30
Poultry 5 10
Total 30 100
From the table, it can be seen that the area of farming
operate are crops that is the crop that can be produce is
60% while the cattle rearing is 30% and poultry is 10%.
Question No 6: Which financial institution do you work
with?
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OPTION RESPONSES PERCENTAGE
NACRDB 10 33.3
NCCUN 10 33.3
Commercial bank 10 33.4
Total 30 100
From the table, it can be seen that the researcher has equal
number of respondent from the three (3) financial
institutions.
Question No 7: What level of production do you belong?
OPTION RESPONSES PERCENTAGE
Cash crop 10 40
Food crop 15 60
Total 25 100
From the table, it can be seen that the level of production
that the farmers operate are food crops that is the crop that
can be produced and also be sold utilize in the country and
about 40% produced cash crop which can be sold to another
country.
Question No 8: Do you operate small scale farming?
TABLE 1.2 ANALYSES OF RESPONSES TO QUESTION
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OPTION RESPONSES PERCENTAGE
Yes 22 88
No 3 12
Total 25 100
From the table, it can be seen that 88% of people operate
small scale firming while 12% did not.
Question No 9: Have you received credit before from your
agricultural credit co-operative for your production.
OPTION RESPONSES PERCENTAGES
Yes 15 70
No 10 30Total 25 100
From the table, it can be seen that 70% of people received
credit and 30% of people did not.
Question No 10: If yes, what did you use the credit for?
OPTION RESPONSES PERCENTAGE
Solving Household
problem
10 33.4
Financing small 10 33.3
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scale farming
Others 10 33.3
Total 30 100
From the table, it can be seen that the researcher has equal
number of respondent from the three (3).
Question No 11: Have you encountered problem of not
getting enough fund from the co-operative?
TABLE 1.3 ANALYSES OF RESPONSES TO QUESTION
11
OPTION RESPONSES PERCENTAGE
Yes 6 76
No 19 24
Total 25 100
From the above it can be seen that most farmers does not
encounter problem of getting fund from the co-operative.
This can be because the farmers are member of the co-
operative society so they don’t find it difficult to obtain
enough funds from the society.
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Question No 12: As a member of the agricultural credit co-
operative, do you normally go through a long process before
getting loan from co-operative?
OPTIONS RESPONSES PERCENTAGE
Yes - -
No 25 100
Total 25 100
From the table, it can be seen that the farmers being
members of the agricultural credit co-operative does not go
through a long process before loan can be distributed to
them.
Question No 13: As a small scale farmer is the condition of
the loan favorable to you?
TABLE 1.4 ANALYSES OF RESPONSES TO QUESTION 13
OPTIONS RESPONSES PERCENTAGE
Yes 22 88
No 3 12
Total 25 100
From the table above, it shows that the condition of the loan
is favorable to about 88% of the farmers. This can be
because the farmers are already members of the agricultural
credit co-operative. As a member, he or she should know
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the condition of the loan of his co-operative society and also
has seen it favourable.
Question No 14: Have you ever made an attempt as an
individual to get credit from financial institution for
production.
TABLE 1.5 ANALYSES OF RESPONSES TO QUESTION 14
OPTIONS RESPONSES PERCENTAGE
Yes 26 86.7No 4 13.3
Total 30 100
Question No 15: If yes, how successful has your attempt
been?
TABLE 1.6 ANALYSIS OF RESPONSE TO QUESTION 15
OPTIONS RESPONSES PERCENTAGE
Very successful 30 100
Partly successful - -
Unsuccessful - -
Total 30 100
From the table above, it shows how successful your attempt
is, it shows that is very successful.
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Question No 16: Are the financial institutes involved in
Agricultural financing actually interested in financing small
scale farmers.
TABLE 1.6 ANALYSES OF RESPONSES TO QUESTION 16
OPTIONS RESPONSES PERCENTAGE
Yes 2 8
No 23 92
Total 25 100
From the table it can be seen that financial institutions
involve in agricultural financing are not interested in
financing small scale farmers. This response is from the
experience of small scale farmers that had gone the financial
institutions for loan they have gotten response that are not
favorable for them.
Question No 17: Do the society help members to make
sure that the credit is been utilized properly?
TABLE 1.7 ANALYSIS OF RESPONSE TO QUESTION 17
OPTIONS RESPONSES PERCENTAGE
Yes 25 100
No - -
Total 25 100
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From the table, it can be seen that the small scale farmers
pay interest on loan in their agricultural credit co-operative.
Despite the fact that they are members they also pay
interest on loan.
Question No 18: Do the small scale farmers able to provide
the collateral needed for the loan?
TABLE 1.8 ANALYSIS OF RESPONSE TO QUESTION 18
OPTIONS RESPONSES PERCENTAGEYes 25 83.3
No 5 16.7
Total 25 100
From the table, it can be seen that the small scale farmers
are not able to provide collateral on the loan to these
financial institution. This situation can bring about difficulty
of these small scale farmers to obtain loan form the financial
institution.
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CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND
RECOMMENDATIONS
In this chapter, findings from the analysis data
conducted interview and reviewed literature shall be stated
by the researcher, conclusion and recommendations shall be
dearly enumerated.
5.1 SUMMARY OF FINDINGS
Agricultural credit co-operative is a co-operative society
that advances credit to small scale farmers for their
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agricultural production. Ordinarily, it is noted to be of
paramount important to the survival and increase in
production of the small scale farmers considering its
objectives. More as the researcher was able to find out the
following in the course of study.
1. The credit which the farmers that are members to an
agricultural credit co-operatives receive form the co-
operative are very effective to their production. This
shows that the small scale farmers enjoys and also
benefit form the agricultural credit co-operative from
their production.
2. The small scale farmer do mot encounter problems
of not getting enough funds they need for their
production form the agricultural credit co-operatives.
3. The conditions of the credit are favourable to the
small scale farmers
4. The small scale farmers do not go through a longer
process before getting loan/credit from the
agricultural credit co-operatives. The agricultural
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credit co-operatives are always ready financially to
disburse finance to their members in each farming
season.
5. It was found out that small scale farmers have gone
to the financial institution for agricultural credit but
their attempt was ineffective due to some conditions
that they were not able to comply with.
6. It was found out that the small scale farmers that
some agricultural financial institutions are not
interested in advancing credit to them because of
their level of exposure, illiteracy and had not been
able to provide the collateral needed by those
financial institutions cannot easily reach them.
7. The small scale farmers pay interest on loan in the
agricultural credit co-operative but it is not
comparable to that of high rate in the financial
institutions.
8. The agricultural credit co-operatives help the small
scale farmers by making sure that credit advanced to
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them are been utilized properly to increase their
production.
9. The illiteracy of these small scale farmers makes it
difficult for the staff of the financial institutions to
disburse loan efficiently to the small scale farmers.
10. The small scale farmers found it difficult to provide
the collateral needed for the loan by the financial
institutions
11. From the findings, it was seen that these financial
institutions does not easily get access to the rural
areas where most of these small scale farmers
reside.
5.2 CONCLUSION
Agricultural credit co-operatives is an agricultural
organization whereby two or more people with a purpose
and a similar objective come together, to seek solution to
achieve their objective by applying co-operative principles,
rules and ideology.
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It can be seen \from the finding that the small scale
farmers due to their financial incapability they can’t afford
the collateral used, to obtain credit from financial
institutions. And also, low level of exposure and
enlightenment, illiteracy makes it difficult for them to
interact with terms our procedures for obtaining loan from
financial institutions. It was also observed that these small
scale farmers were unable to obtain loan because of the risk
involved in farming which were unable to control and which
can bring default of repaying the loan, it was also found out
that the financial institutions staff are always reluctant to
travel to the rural areas where the small scale farmers in
disbursing loans and also to supervise them on the project
to avoid default of loan. It can be clearly seen that the able
supplements for financing small scale farmers was the
agricultural credit co-operatives. This co-operative admit the
small scale farmers as members of the cop-operative and
help them by educating them on modernized methods of
farming and the best way to utilize credit also to make sure
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that the credit given to them was utilized for the purpose it
was given and the co-operative will closely supervise them
to ensure effectiveness and increased production.
5.3 RECOMMENDATIONS
The researcher recommends the following remedies
from the findings carries out in the work
1. That there is need to establish more agricultural
credit co-operatives in different areas especially
in rural areas to be able to advance credit to
their small scale farmers.
2. That there is need to create awareness of this
agricultural credit co-operatives to small scale
farmers to make them able to know the
importance and what they can benefit from the
co-operative.
3. That the government should always give fund
for agricultural development through the
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various agricultural credit co-operatives in the
country.
4. That this agriculture credit co-operative will be
able to really analyze the project, the small
scale farmers want to embark on and also
educate them on modernized methods for easy
increase in production.
5. That the government needs to provide subsidies
for small scale farmers through agricultural
credit co-operatives because through these
cooperative they will be able to obtain the
subsidies quicker and easier for production.
6. The agricultural credit co-operative must have
grassroots support, it therefore should have at
the lowest cadre “the primary agricultural credit
co-operatives society” at the state level these
primary societies would come together to form
one single state apex like ACFC. At the national
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level, the state apexes come together to form
their national body of the organization.
7. That agricultural credit co-operative must avoid
external influences and control, it must rely on
outside assistance and support for better
efficiency.
8. That agricultural credit co-operatives must
organize as a matter of priority, workshop and
seminars for leaders of the co-operative in the
primary level to acquaint them with new
farming techniques and creditor control.
9. Those agricultural credit co-operatives should
operate on co-operatives principle and ideology
to ensure maximum co-operation management.
10. That agricultural credit co-operatives should
also help the small scale farmers to see a better
market to display and sell their product.
From the recommendations, it can be seen that
agricultural credit co-operatives will raise small scale
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farmers to be the nation’s cash crop exporters, and it can
help in the development of the nation because when these
remedies are carried out it will be truly a design strategy to
meet the special need of small scale farmers. It will also free
the small scale farmers of bureaucratic delays and neglect
characteristics of farmers schemes, protect small scale
farmers form unserious interest charge of money lenders, it
would also give small scale farmers a sense of belonging
because they would see themselves as part of the
organization since they are shareholders. This would also
give the sense of pride and therefore they will feel
committed to the ideal of the co-operation to see the
progress always through this there will be increase in the
production of food stuffs, which is highly needed to support
the ever-increasing population of the country.
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BIBLIOGRAPHY
AYODELE E.I.O (2001) “Nigeria Agriculture:
Problems and Prospects in M.O OJO
et al (d) Ibid.
AWOYEMI O. (2003) Problems of Agriculture in Nigeria: In
M.E.C. Edoru and Ayo Akiongbade.
Lagos University Press, Nigeria.
EZEANOZIE A. N. (1989): Financing Co-operative Projects.
Experience and Lessons. A paper
Presented at the National Seminar on
C-operative Development. Federal
Ministry of Information News watch
Magazine.
IKE D.O (2003): Rural Banking Programme in Nigeria,
Lagos King and George Printing press.
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IKE D.O (2001) Appraisal of Agricultural Credit Guarantee
Scheme Fund in Nigeria.
Nigeria Journal of Financial
Management.
OKAFO OKOREAFFIA (2005): Co-operative Policy and
Legislation. Publisher in
Nigeria by Dab2s Enterprise
Owerri Imo State.
TONY A. (2006): Introduction and Principles of C-
operation. Owerri Don Ell Printing and
Publishers Co.
OGUJIOFOR E.A (2003): C-operative Practitioners
Fieldwork Administration
Nkem Publisher Owerri
Imo State.
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DICKSON I.O (2005): International C-operation and Co
operative Development in Nigeria.
Publish in cyprint, Aba Abia State
OBI-OKOGBO E.J (2006): Essentials of C-operative Field
Work Administration. Publish in
Advanced Graphic, Owerri, Imo
State.
OKONKWO M. (2005) Agricultural C-operative Extension
Publisher in Nigeria by Dab2
s
Enterprises Owerri Imo State.
SEMOWD B.I (1978): Financing Agriculture Delivered at
13th Annual Seminar of NIB.
WRIGHT J.A (1981): Problem of Agricultural Financing
Bullion Delhi Vands Publication Ltd U.S.A.
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QUESTIONAIRE FORMAT
APPENDIX
Your Department,
Your school,
P.M.B 1036 city.
Your State.
4th August, 2010.
Dear Sir/Madam,
AGRICULTURAL CREDIT CO-OPERATIVES AS VIABLE
SUPPLEMENTS FOR FINANCING SMALL SCALE
FARMING IN NIGERIA.
I am an HND final year student of of the above school,
conducting a research on the agricultural credit co-
operatives as viable supplements for financing small scale
farming in Nigeria with a case study of selected agricultural
credit co-operatives in Umudike, Ikwuano L.G.A. The
research is in partial fulfillment of the requirements for the
award of Higher National Diploma (HND) in your dept
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Please answer the following questions as truthfully and
correctly as possible and be assured that your answers will
be used only for the purpose of the research.
Thanks for your co-operation.
Yours Sincerely,
Your name
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QUESTIONAIRE
SECTION A
INSTRUCTIONS: Please tick where applicable
SEX: MALE FEMALE
AGE: 20-3- 30-50 50 and above
STARUS: SINGLE MARRIED
EDUCATIONAL QUALIFICATION: FSLC SSCE
5. What area of farming do you operate on?
a) Crop
(b) Cattle rearing
(c) Poultry
SECTION B
6. Which financial institution do you work with?
a) NACRDB
b) NCCUN
c) Commercial Bank
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7. What level of production do you belong?
a) Cash Crop
b) Food Crop
8. Do you operate small scale farming?
Yes No
9. Have you received credit before from your agricultural
credit co-operative for your production?
Yes No
10. If yes what did you use the credit for?
a) Solving household problem
b) Financing small scale farming
c) Others
11. Have you encountered problem of not getting enough
fund form the co-operative?
Yes No
12. As a member of the agricultural credit co-operatives,
do you normally go through a longer process before
getting loan from co-operative?
Yes No
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13. As a small scale farmer is the conditions of the loan
favorable to you? Yes No
14. Have you ever made an attempt as an individual to get
credit from financial institution for production?
Yes No
15. If yes, how successful has your attempt been?
a) Very successful
b) Partly successful
c) Unsuccessful
16. Are the financial institution involved in agricultural
financing actually interested in financing small scale
farmers?
Yes No
17. Do the society help members to make sure that the
credit is been utilized properly
Yes No
18. Do the small scale farmers able to provide the